Experts Say Energy Innovation Strengthens Manufacturing

A recent study released by the London School of Economics and Political Science (LSE) examined how new technology has impacted the surge of natural gas production in the United States and made U.S. manufacturing more competitive in the global marketplace. It’s great news that abundant energy resources are energizing American manufacturing. But if we don’t modernize our energy infrastructure to fully connect these resources to manufacturers, we will fall short of our full economic potential.

As the LSE study concludes, manufacturing and other U.S. industries are closely tied to the pulse of the energy industry. Due to energy development in the United States, natural gas is more readily available, lowering energy prices and thus lowering production cost for companies that rely on natural gas as a power source or ingredient. As a result, manufacturers have received a boost in their global competitiveness.

In fact, the report finds “average manufacturing exports have expanded by roughly 10 percent due to the shale gas boom. This amounts to roughly 4.4 percent of the overall value of exports of goods and services from the United States in 2012.” The report goes on to explain that this American energy advantage played a significant role in our recovery from the financial crisis of 20072008.

In addition to enhanced competitiveness, the LSE study also highlights how manufacturing benefited from the shale boom through employment gains. For every two jobs created in direct relation to technologies like hydraulic fracturing, one additional job was added elsewhere in the country due to indirect effects.

However, it isn’t enough to simply innovate technologies that produce more energy—it needs to be connected to the people who can use it. Our nation is now in need more than ever for modern energy infrastructure to safely move natural gas and other raw materials to growing industry sectors, businesses and homes.

Much like the developments that supported the increased production of natural gas, energy infrastructure will help spur economic growth and global competitiveness by more efficiently connecting energy to markets. Energy infrastructure supports families with good paychecks, creating jobs along the supply chain and in the communities that use that energy the infrastructure delivers. In our recent study Energizing Manufacturing, IHS Economics concluded that increased access to natural gas added an additional 1.9 million jobs economy-wide in 2015 alone.

Energy development is beneficial to our country. This most recent study is simply the latest to examine how energy development grows our economy and creates new opportunities. But it doesn’t stop with production. We need the infrastructure to deliver those opportunities. As we move into 2017, it’s time to invest in modernizing our infrastructure so that every community across our diverse nation has a fair chance to prosper.

Rachel Jones

Rachel Jones

Director, Energy and Resources Policy at National Association of Manufacturers
Rachel Jones

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